Plan For Deducting The Amount Of Tax Earned From Overseas Income (1)

The amount of taxable income of an enterprise in 2000 is 1 million yuan, and the income tax rate is 33%. It has branches in A and B, the income in A countries is 400 thousand yuan, the income tax rate in A countries is 30%, the income in B countries is 460 thousand yuan, and the B national income tax rate is 35%.

In A and B, the two countries have respectively paid 120 thousand yuan and 161 thousand yuan in income tax.

Suppose that the taxable income in the two countries of A and B is 450 thousand yuan and 480 thousand yuan respectively according to the tax law of our country.

Q: how much is the income tax payable to the company?

Concerning the calculation of the tax paid for overseas investments, the Interim Measures for the Levy of income tax on overseas income (Amendment) [fiscal and taxation words (1997) 116th] stipulates that the income tax paid by taxpayers outside the country can be deducted by the following one when collecting taxes.

(1) there is no partial deduction for each country: enterprises can provide overseas tax payment certificates in full.

The income tax paid by taxpayers outside the country shall be deducted according to the country (region).

In respect of the income tax paid abroad, including the actual tax paid by the taxpayer and the income tax paid according to the regulations, the taxpayer shall provide the tax certificate or tax certificate issued by the tax authorities of the country (region), as well as relevant certificates of tax deduction and exemption, and declare the income tax paid abroad.

(2) fixed rate deduction: in order to facilitate the calculation and simplification of the collection and management, enterprises can also make the tax exemption or non tax-free items by the approval of the tax authorities, and deduct the percentage of foreign taxable income by 16.5%.

The above provisions provide a planning space for taxpayers to calculate the tax paid for overseas income.

The income tax rates of enterprises (companies) all over the world are different.

Most countries or regions adopt a single tax rate, the level of tax rate is also high and low, with a low 10%~20% and a high 50%~60%.

The tax rates in developed countries are generally between 30%~40%, for example, 33% in the United Kingdom, 34% in the United States, 33.3% in France, 36% in Spain, and so on.

A small number of countries, such as Guatemala, Panama, Saudi Arabia, Sultan and Paraguay, have adopted a multi-level progressive tax rate to reflect the principle of affordability.

The difference of tax rate determines the difference of the enterprise (company) income tax burden. There are two ways to calculate the tax deduction for overseas income, and the amount of tax paid is different.

Therefore, taxpayers can choose which method to deduct according to the income tax rate of the invested country.

Two methods are used to calculate the tax payable in the previous year.

(1) the amount of tax payable in accordance with the tax law of our country and abroad is (100+45+48) x 33%=63.69 (10000 yuan) (2). The deduction limit is A's deductible limit = the total amount of tax payable in accordance with the tax law (the total income from domestic and overseas income derived from A) = (100+45) x 33% x [45 (100+45)]=14.85 (10000 yuan), the deductible limit of B country = the total amount of taxable income calculated by the tax law (the total income from domestic and overseas income derived from B) = (100+48) x 33% * [48] (B) (10000 yuan) (1) limit deduction method